Health Insurers Move Ahead, With Or Without Individual Mandate

For the health policy world, the Supreme Court's tough questioning of the individual mandate last week was a seismic event.

But in Hartford, Conn., the city sometimes called the epicenter of the insurance industry, David Cordani isn't quaking.

Cordani is the CEO of Cigna, the nation's fourth-largest health insurer. He says the insurance industry started changing itself before the Affordable Care Act became law in 2010. And the changes will continue regardless of what happens at the high court.

"The broader health care debate is way larger than the individual mandate," Cordani said during an interview in his sunny corner office, just a few hours after some of the justices seemed ready to strike down the mandate.

Cigna, like the broader insurance industry, hasn't taken a position on whether or not the mandate requiring Americans to buy health coverage is constitutional. Cordani points out that it really only deals with expanding care to people in the small-group and individual markets. That's a fraction of the total number of people insured, and it's not a major market for Cigna.

Cordani says the act does a fair enough job at expanding access to care, but it doesn't do as much to improve the quality of care and drive down costs. That's his focus: changing the way we think about insurance, from paying for "sick care" to paying for "health care," driving consumers to stay healthy and giving doctors incentives to keep them that way.

"What we've been doing is innovating programs around that, with or without the Affordable Care Act," Cordani says.

He says Cigna is still deciding how and where to sell insurance in the new exchanges — the health insurance marketplaces that will open for business in 2014. That's not exactly easy, according to Tom Wildsmith of the American Academy of Actuaries. Actuaries evaluate future risk, and Wildsmith says what's keeping them up at night is trying to figure out whom they're going to be covering next year.

"The challenge with health care reform is that it injects some uncertainty in the system that means that, even in the aggregate, we don't know exactly how things are going to work out," he says.

Even if all of the rules were set in stone, there's still uncertainty about who will be in a particular insurer's risk pool and what the Supreme Court will do.

Among insurer worries: If the mandate goes, will the young and healthy buy in, or will they wait until they are sick to buy insurance? And what if a state's new baseline coverage — called essential health benefits — is just too expensive?

"If essential health benefits package means that many of their customers will have to buy up from a Yugo to a Chevy, they are concerned that they may lose some customers in the buy-up process," Wildsmith says.

Karen Ignagni, CEO of America's Health Insurance Plans, the industry lobby, says insurers aren't waiting to find out. They're working with hospitals and doctors to change the way care is paid for and to keep costs down, just as Cigna's Cordani wants. She cites two studies that say Medicare plans run by private insurers are succeeding at keeping seniors from being readmitted to the hospital after procedures.

"We're leading the way, according to government data on re-admissions," she says. "That's a win-win on both sides. There's real data now to support the contention that these strategies and these tools work very, very effectively."

What wouldn't work, Ignagni says, would be to ditch the individual mandate and still make insurers continue to accept all comers regardless of the status of their health.

"In every state that tried market reforms without bringing everyone into the system, we saw those markets blow up," she says.

Insurers will be just fine — particularly if the part of the law that subsidizes insurance for lower-income Americans survives the Supreme Court challenge, according to Mila Kofman of Georgetown University's Health Policy Institute.

"We're looking at billions of dollars into the pockets of the health insurance industry," says Kofman, a former superintendent of insurance in Maine. "So I'm not worried about the health insurance industry and their financial health at all. This is going to be very good for their bottom line."

In fact, even on the day the Supreme Court looked like it was ready to toss the individual mandate, Cigna's stock was up 4 percent, and other insurers saw similar gains.

Shots is the online channel for health stories from the NPR Science Desk. We report on news that can make a difference for your health and show how policy shapes our health choices. Look to Shots for the latest on research and medical treatments, as well as the business side of health. Your hosts are Scott Hensley and Nancy Shute. You can reach the Shots team via our contact form.